Kansas Republican supports stock ban for Congress. He won’t say what he’ll do with his own

When Prasanth Reddy left his job as a vice president at LabCorp to run for Congress in Kansas’ 3rd Congressional District, he left with at least $250,001 in stock in the company.

Reddy built a multi-million dollar financial portfolio during his career as a cancer physician and medical executive. He holds between $315,004 and $651,000 in stocks in four companies, according to his campaign finance disclosure report.

Since the early days of the COVID-19 pandemic, when members of Congress came under scrutiny for their transactions, pressure has been building on Congress to prohibit members from owning stock. Candidates now regularly pledge to support a ban.

Reddy, the favorite to win next week’s Republican primary to face Rep. Sharice Davids in November, is among the candidates who support a ban. But he declined to say whether he would divest from his stock if elected in November.

He told The Star that members of Congress “shouldn’t be trading their own stock or directing their own trades.”

“Part of the reason I am running for Congress is because I’m tired of self-serving politicians doing one thing but saying another, including trying to enrich themselves from insider trading,” Reddy said. “I will never support any effort to legalize insider trading among members of Congress, and will never vote on legislation to enrich myself.”

Reddy’s part of a larger pattern, said Sen. Josh Hawley, a Missouri Republican who has sponsored several bills to prevent lawmakers and their families from owning individual stocks. He said people will campaign on stock bans but fail to follow through once they arrive in Washington.

“When it’s time to vote on it they’re like, ‘Oh, well I have concerns,’” Hawley said. “The concern is they don’t want to give up the money. That’s the concern.”

Hawley has co-sponsored a bipartisan bill making its way through the Senate. The bill, which prevents lawmakers and members of their immediate families from owning, buying or selling stock, has already cleared a Senate committee, and Hawley has been promised it will get a vote on the Senate floor.

But such bills have floundered before. And members of Congress, including both Senators from Kansas — Republicans Jerry Moran and Roger Marshall — continue to hold stock, as of their latest financial disclosure reports. Hawley does not hold any individual stock.

“The problem is that the perception out there, which is not inaccurate, is that Congress is full of rich people — not me, sadly — but rich people who are up here focused on getting richer,” Hawley said. “And we look at many members of Congress trading stock and it’s like, that’s not wrong.”

An effort to ban

Earlier this month, Hawley stood with four Democratic Senators and announced a breakthrough. After years of stalled legislation aimed at limiting stock trading, the group now had a bill they believed could make it through a Senate committee.

It was a small step — the bill still needs to be passed by the full Senate and House — but Hawley appeared encouraged that it would make progress.

“There is no reason why the personal profit of members of Congress should come first,” Hawley told reporters. “It should come last, it shouldn’t be a consideration at all. And I’m proud to say I think this bill takes a giant step forward to get into that place. I think it’s a tough bill. I think it’s a serious bill.”

The bill, called the ETHICS Act, would ban members of Congress – and their immediate family – from buying or selling stock within 90 days after it’s passed. It would require lawmakers to divest from their individual stocks within 120 days and prevent them from forming blind trusts.

If lawmakers don’t divest, they would be fined 10% of the value of their individual stocks every 30 days.

The bill would effectively strengthen the existing STOCK Act, passed in 2012, which requires lawmakers to report any stock trades within 45 days of the transaction. As Congress has failed to pass a ban, some investors use the reports required under the STOCK Act to mimic the transactions made by members of Congress.

Where they stand

While the Senate proposal currently has momentum, it’s one of many proposals floating in Congress.

Davids, a Kansas Democrat, signed on to a House bill in 2022 that would require members and their families to put individual stock into a blind trust. The Senate legislation prevents members from using blind trusts.

“To prevent misconduct and ensure all Members put their constituents first, the U.S. House must take up legislation that imposes stronger measures against insider trading,” Davids said. “This is about restoring faith in our federal government, a core reason why I ran for Congress in the first place.”

Generally, the lawmakers who most support individual stock bans don’t have individual stock. Neither Davids nor Karen Crnkovich, another Republican running in the district, currently own stock that would be banned by the Senate bill.

Crnkovich, like Davids, supports allowing members to move their individual stock into blind trusts.

While Davids owned stock in several green energy companies when she first entered Congress — Energy, Maxeon Technologies, Organovo Holdings and SunPower Corporations — she sold her stock three months after signing onto the House bill.

Only one transaction earned her more than the minimum reporting requirement of $1,000.

While Reddy indicated he was supportive of a stock ban, he largely limited his objections to insider trading — which is already illegal — and members of Congress buying and selling their own stock, which stops short of preventing members of Congress from holding stock at all.

Reddy’s individual stock makes up between 12% and 15% of his financial portfolio — which spans from a minimum of $2 million to a maximum of $5.1 million, according to his financial disclosure.

Instead, most of his money is in exchange traded funds and mutual funds — the same type of funds that Davids and Crnkovich have.

Crnkovich has between $30,016 and $275,000 when not including her HVAC company, which is valued between $10 and $50 million, and Davids has between $21,007 and $140,000, not including a rental property she owns which is valued between $250,000 and $500,000.

Unlike individual stock, exchange traded funds and mutual funds contain several investments — limiting the perception that a politician is making trades based on any knowledge they may have gleaned from their role in Congress.

“The idea that any member of Congress who has, they have purview to information that the general public does not have,” Crnkovich said. “And the idea that they could leverage that inside information essentially to further enrich themselves is absolutely atrocious.”

This story was originally published July 31, 2024 at 11:30 AM.

Daniel Desrochers

The Kansas City Star

Daniel Desrochers was the Star’s Washington correspondent. He covered Congress and the White House with a focus on policy and politics important to Kansas and Missouri. He previously covered politics and government for the Lexington Herald-Leader and the Charleston Gazette-Mail.